Pancreatic expression of the glucagon gene depends on multiple transcription factors interacting with at least three DNA control elements: G 1, the upstream promoter element, and G 2 and G 3, two enhancer-like sequences. We report here that the major enhancer of the rat glucagon gene, G 2, interacts with three protein complexes, A 1, A 2, and A 3. A 2 is detected only in islet cells, and impairment of its binding to mutant G 2 causes a marked decrease in transcriptional activity. We identify A 1 as hepatocyte nuclear factor 3β (HNF-3β), a member of the HNF-3 DNA-binding protein family found in abundance in the liver which has been proposed to play a role in the formation of gut-related organs. HNF-3β binds G 2 on a site which overlaps A 2 and acts as a repressor of glucagon gene expression, as demonstrated by mutational analyses of G 2 and by cotransfection of HNF-3β cDNA along with reporter genes containing G 2 into glucagon-producing cells. Our data implicate HNF-3β in the control of glucagon gene expression and strengthen the idea of endodermal origin of the islet cells.